Extra Problem 2 - Decision Trees & Influence Diagram - Solution Key

Extra Problem 2 - Decision Trees & Influence Diagram - Solution Key

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Unformatted text preview: EMGT 269 – Elements of Problem Solving and Decision Making Question by Instructor: Dr. J. Rene van Dorp EXTRA PROBLEM 2: CONSTRUCTING DECISION TREES & INFLUENCE DIAGAMS The Executives of the general products company (GPC) have to decide which of three products to introduce, A, B, or C. Product C is essentially a risk-free proposition, from which the company will obtain a net profit of $1 million. Product B is considerably more risky. Sales may be high, with resulting net profit of $8 million, medium net profit of $4 million, or low, in which case the company just breaks even (i.e. net profit = $0 million). The probabilities for these outcomes are Pr(Sales High for B) = 0.38 Pr(Sales Medium for B) = 0.12 Pr(Sales Low for B) = 0.50 Product A poses something of a difficulty; a problem with the production system has not yet been solved. The engineering division has indicated its confidence in solving the problem, but there is a slight (5%) chance that devising a workable solution may take a long time. In this event, solution may take a long time....
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This note was uploaded on 12/04/2011 for the course BUSINESS 500 taught by Professor John during the Spring '11 term at Kansas.

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Extra Problem 2 - Decision Trees & Influence Diagram - Solution Key

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